OK Microsoft, Here's How To Keep Your Pretty New Phones From Flopping

Today in New York, Microsoft showed off the first actual phones running Windows Phone 7, the smartphone platform that the company hopes will save it from irrelevance in the mobile space.

The platform itself looks pretty fresh.

Instead of following the well-established iPhone model of a bunch of icons on a screen, Microsoft has designed the platform as a series of horizontal and vertical scrolling menus.

Feature highlights include a customizable start page, connections to the Xbox Live gaming service, a music and video playback experience like the (underrated) Zune HD, and of course connections to Microsoft's enterprise software like Exchange for e-mail and SharePoint for document sharing.

But platform design will only take Microsoft so far.

To avoid the fate of Palm's Web OS--another lovely looking smartphone platform that had almost no impact on the market before being snapped up by HP a few months ago--here's what needs to happen.

Software can only take Microsoft so far.

Hardware makers must design cool phones. Consumers don't buy smartphone software--they buy phones. Microsoft is exercising much more control over hardware specs with Windows Phone 7 than it did with its old Windows Mobile platform, dictating everything from the type of touch screen to the mandatory Start and Bing search buttons on the front of every phone. But to compete with the iPhone and the latest crop of Android handsets like the Droid Incredible, Microsoft's hardware partners ( HTC, Samsung, Dell, LG, and Asus) are going to have to be as innovative on hardware as Microsoft was on software. Thin is still in, and battery life is critical. It would also be helpful to see some unique extras like built-in speakers that don't suck.

Microsoft must market like crazy. The iPhone had first-mover advantage with consumer smartphones. Google and its partners, particularly Motorola, have done a spectacular job promoting Android. BlackBerry has its longtime fans and loyalists.But what's a Windows Phone? Apart from Microsoft employees, most people that I've spoken with still think of the old Windows Mobile platform when they hear those words. Microsoft reportedly plans to spend as much as $500 million promoting the platform. Some of that money should be spent on big-blitz TV advertising.

There has to be an app for that. This is probably the biggest problem for Microsoft at launch: application developers go where the users are, and Windows Phone 7 is starting with a user base of zero. Microsoft has been trying to evangelize developers, reportedly offering developers of high-profile apps revenue guarantees in case the platform fails, but the company is going to have a hard time marshalling anything close to the iPhone's arsenal of 200,000 apps. This is going to be a long process.

Verizon must get a phone. Windows Phone 7 will launch with only two U.S. carriers, AT&T and T-Mobile. Frustrated iPhone users already know that AT&T has huge gaps in coverage, and my one experience with T-Mobile was so bad that I literally threw my cellphone in the garbage in frustration. Verizon seems to be the undisputed king of coverage in the U.S. Windows Phone 7 can't succeed without it, and that's going to require both new hardware--Verizon doesn't use the GSM standard that AT&T and T-Mobile do--and some serious arm-twisting. (This year's Kin debacle-- Verizon was its exclusive U.S. carrier partner--didn't help.)

Target: BlackBerry. The iPhone has created a lot of loyal Apple fans. They're not about to switch. Android launched less than two years ago, which means that Android users are all still under contract. They're not going to switch either. Microsoft's best chance is to target BlackBerry users. The pitch should be all the fun of an iPhone (games, multimedia) with an e-mail experience that's better than the BlackBerry. Plus mobile Office to boot.